At least they don’t do so in any way which stands much chance of meaningful success in the the real world. Here is the direct quote from HUD Secretary Sean Donovan’s May 29, 2009 press release: “Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.” (emphasis added)
I was fairly excited to see HUD’s press release on Thursday that they had taken action against more than 120 lenders who had violated HUD guidelines. 102 FHA approved lenders were cut off from participation in the FHA program for various reasons. This excitement was only slightly tempered by my knowledge that some of the “cut off” lenders were already out of business anyway for other reasons.
Just a short update to make sure the latest information is available on the site – even though what I’m about to tell you isn’t really “information” yet in my view!
According to a report in Realtor Magazine, HUD spokesman Lemar Wooley has stated that the proposal is still on track. As I suspected from the fact that the original Mortgagee Letter 09-15 was fairly fuzzy on the details, it appears they just got a little ahead of themselves.
FHA released a notice the other day extending the property flipping waiver, but I didn’t relay the information since I saw there was an obvious mistake in the notice. Please note that this still does not mean that investors can buy properties and resell them with FHA financing prior to the expiration of the 90 day period. This rule is designed to adapt the rule to the fact that lenders often hire other firms or subsidiaries to handle foreclosure sales.
Sorry to be a little late with this update, but I’ve been trying for several days to figure out the real scoop on exactly what happened. For the first time that I can ever remember, FHA actually published a mortgagee letter on their website and then just removed it.
Usually the process of revoking a Mortgagee Letter would involve issuing another Mortgagee Letter with updated rules. Looks like someone at HUD may have gotten ahead of themselves!
Here are the full details on how the monetization of the $8000 first time homebuyer tax credit will work for FHA loans. You can obtain the full HUD Mortgagee Letter 2009-15 here.
I have been receiving emails and even phone calls asking for the location of the HUD Mortgagee Letter about this all morning so I thought I needed to go ahead and post the details that I have. [Details are now available here]
HUD’s Fiscal Year 2010 budget press release. Pretty much complete bureaucratic gobbledygook.
HUD FY2010 BUDGET SHIFTS FOCUS TO RESPONSIBILITY, EFFECTIVENESS, AND TRANSPARENCY
WASHINGTON, DC – U.S. Housing and Urban Development Secretary Shaun Donovan today unveiled the Department’s fiscal year 2010 budget, which focuses on responsibility, effectiveness and transparency. The proposed 2010 budget exercises strong fiscal discipline, consolidating or eliminating 27 programs and activities, and investing in initiatives to increase transparency and accountability.
